Clean Energy Progress in America’s Electric Sector in 2018
Part of NRDC’s Year-End Series Reviewing 2018 Energy Developments
Americans are paying less of their incomes for electricity and breathing cleaner air as 2018 draws to a close (electricity bills represent less than 1.5 percent of average household income, the smallest share since 1955). And just this week, a giant utility serving millions of people across eight states pledged 80 percent reductions in carbon pollution from its power plants by 2030.
When I joined NRDC in 1979, I assumed that I would spend my entire career suing America’s electric utilities, who were then the environmental community’s favorite adversaries. Instead, many of what I now call our home-town utilities have emerged as essential clean energy partners, ruining my hopes for courthouse immortality. There are compensations, like lower energy bills and dramatic pollution cuts, including a 28 percent reduction in greenhouse gas emissions over the past decade. The most important contributor has been energy efficiency gains throughout the economy.
In keeping with an end-of-year NRDC tradition, I’m highlighting some of the electricity sector’s principal achievements for 2018 (and for much more on America’s recent clean energy progress and reduced energy costs, see NRDC’s Sixth Annual Energy Report):
- The year began with findings that America’s electric and natural gas utilities invested more than $7.8 billion in programs to help customers use energy more efficiently in 2017. The electricity savings alone exceeded the annual production of eight giant coal-fired power plants (enough to serve millions of residences). Adjusted for inflation, utilities’ investments in energy efficiency programs rose by about one-sixth over the past five years, reducing customers’ bills by avoiding more costly energy purchases.
- In February, at the close of a lively debate before the nation’s utility regulators, NRDC and the Edison Electric Institute issued a joint statement, the fourth in a series that began more than 15 years ago. Here is the introduction to the latest version:
A clean energy transition is underway and accelerating: America’s power sector has made remarkable progress in reducing carbon and other emissions in recent years (and in some cases decades), while making energy products and services even more affordable and reliable. Energy efficiency has helped to moderate growth in electricity consumption significantly, renewables are surging, and electric companies are critical partners in distributed energy resources.
We share the goal of continued progress in upgrading the grid and improving the energy system to further reduce carbon and other emissions cost-effectively, including by (i) delivering cost-effective energy efficiency through a coordinated combination of electric company programs and government standards, (ii) integrating increasing amounts of clean energy resources, (iii) electrifying transportation with efficient electric vehicles and charging systems, and (iv) increasing research, development and demonstration of emission-reducing technologies, including those that reduce emissions from fossil generation (e.g., carbon capture and storage).
- In March, my colleague Sheryl Carter chronicled an impressive array of recent carbon pollution reduction and clean power commitments by more than a dozen utilities across the nation, all driven by strong business rationales.
- Significant energy legislation that same month vaulted Virginia out of the energy efficiency laggard category, promising smart investments of over $1 billion in efficiency over the next decade.
- In June, Pennsylvania enacted Act 58 of 2018, opening the way to progressive utility business model reforms that include revenue decoupling (see below for a nationwide update). NRDC is focused on a PUC policy statement on alternative ratemaking, likely to emerge in the first quarter of 2019, which could cart a clear path toward accelerated energy efficiency progress.
- At summer’s end, California’s legislature raised requirements for the amount of electricity to be generated from renewable resources to 60 percent by 2030 and committed the state to 100 percent zero-carbon electricity by 2045 (SB 100). In addition, Governor Jerry Brown signed an Executive Order with a goal of full decarbonization statewide by 2045. And the Legislature formally embraced a joint proposal (coauthored by NRDC) to retire and replace the state’s only remaining nuclear power plant, Diablo Canyon near San Luis Obispo, with zero-carbon resources by 2025 (SB 1090).
- In November, voting on ballot initiatives, Nevadans passed Question 6 (raising the state’s renewable energy standard to 50 percent by 2030) while rejecting Question 3, which would have slowed statewide progress on energy efficiency and renewable energy development.
- In late November, the California Public Utilities Commission (CPUC) approved a settlement that NRDC helped negotiate in Southern California Edison’s General Rate Case, establishing a new opt-in residential “time of use” rate design that will promote beneficial electrification in both vehicles and buildings. This follows approval earlier in the year of four utility programs with a collective budget of $738 million to “accelerate widespread transportation electrification,” which raises California’s utility investments in this area to approximately $1 billion.
- In December, the Missouri Public Service Commission approved Ameren’s $200 million energy efficiency plan, the largest in state history, with strong emphasis on programs targeting low-income households.
- On December 4, Xcel Energy announced the nation’s (and the world’s) most aggressive decarbonization schedule for a major utility, committing to achieve 80 percent reductions in carbon pollution from its power plants by 2030. Xcel serves millions of homes and businesses in Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas, and Wisconsin. The announcement followed two landmark reports underscoring the need for immediate and broad action to advance solutions to limit global warming and its impacts, one from the U.N. Intergovernmental Panel on Climate Change and the other from 13 U.S. government agencies in the 4th National Climate Assessment.
- NRDC tracks and regularly updates progress on “revenue decoupling,” a crucial utility regulatory reform that breaks the link between the financial health of investor-owned and publicly owned utilities and their sales of electricity and natural gas. Our latest summary is below, showing states that have rejected an outmoded business model that automatically rewards utilities for increased energy sales (and penalizes them for successful efficiency programs that reduce those sales). With decoupling, they can recover their costs of providing energy no matter how much they sell, which encourages them to pursue all cost-effective savings. Thirty-two states have adopted revenue decoupling for at least one utility, and the count of utilities involved is well over 100.